A New Question to Ask About Home Insurance
Photo by Angelica Hasbon on Unsplash
A new California law changes what homeowners can ask their insurer to put on the table, and it is worth understanding before your next purchase or renewal.
SB 876, authored by Sen. Padilla, was signed around Sept. 27. It requires every residential insurer in the state, including the FAIR Plan, to offer at least 50% extended replacement cost coverage. Insurers must also give the homeowner a rebuild-cost estimate.
That second part is quietly important. Many owners have only a vague sense of what it would cost to rebuild their home. Now there is a number to look at.
The catch
This is not automatic. Homeowners must opt in, and they will pay extra for the coverage. The law makes the option available. It does not make it free, and it does not apply itself to your policy.
On timing
The San Francisco Chronicle reports that the law starts next year. I have not found an exact effective date, so I will not guess at one. If a date matters to your purchase or renewal, ask your insurance broker to confirm it.
If you are buying
Insurance is part of the cost of owning, and it belongs in your conversation early, not at the end of escrow. Ask for the rebuild-cost estimate. Then compare it with the dwelling limit on the policy you are being quoted. If the two numbers are far apart, that is a conversation to have with your broker before you commit.
If you are selling
Buyers are going to be asking these questions. A seller who understands the home's insurance picture, and who can speak plainly about it, makes a buyer's decision easier.
The practical takeaways
- Ask for the rebuild-cost estimate.
- Compare it with the dwelling limits on the policy.
- Find out what the extended replacement cost option would add to the premium.
- Confirm the start date with your broker.
None of this is glamorous. But in Los Angeles, knowing how your home is covered is as much a part of the purchase as the inspection. If you want help figuring out which questions to put to your insurance professional, I am glad to help.
